On January 1st, 2017, the Center for Medicare and Medicaid Services (CMS) launched the Medicare Advantage Value-Based Insurance Design (MA V-BID) Model Test to assess the utility of structuring consumer cost-sharing and plan elements to encourage the use of high-value clinical services and providers. Nine MA plans in three of the seven eligible states (i.e. Massachusetts, Indiana, and Pennsylvania) were selected to enroll beneficiaries with specified chronic conditions in 2017. In 2018, the model test expanded to three additional states and included two additional clinical conditions. CMS later announced that, beginning in 2019, the V-BID model would include an additional fifteen new states (for a total of 25), allow Chronic Condition Special Needs Plans to participate, and allow participants to propose their own systems or methods for identifying eligible enrollees.

A review of the peer-reviewed literature reveals how increases in Medicare beneficiary cost-sharing are adversely affecting our most vulnerable beneficiaries, contributing to poor patient-centered outcomes, and, in some instances, increasing Medicare expenditures. Actuarial modeling of MA V-BID programs for diabetes mellitus (DM), chronic obstructive pulmonary disease (COPD), and congestive heart failure (CHF) demonstrates that consumer out-of-pocket costs are reduced in all 3 conditions, plan costs increase slightly in the short term for certain conditions (DM and COPD), and plan savings result for CHF. From the societal perspective, the DM program was close to cost neutral; net savings resulted in the COPD and CHF programs.

Applying clinically nuanced V-BID strategies presents an enormous opportunity for the Medicare program – particularly Medicare Advantage plans. V-BID can encourage the utilization of high-value providers and services and limit the use of services that are of potentially low-value, thus helping Medicare Advantage plans improve health and quality, enhance consumer engagement, and reduce costs.

Manatt Health published an article titled “Medicare Advantage Value-Based Insurance Design: The First Year” which provides an overall analysis on the current progress of the MA V-BID Model Test. Special attention was given to determining which Medicare Advantage Organizations (MAOs) are actively participating in the model test, as well as which disease conditions will be affected by a value-based approach. There are currently 45 plans enrolled in the MA V-BID model test which represent 2% of the Medicare Advantage enrollees nationwide. In 36 of the 45 plans, enrollees with chronic conditions receive reduced cost-sharing for medical benefits. Additionally, studies show that MAOs largely focus on patients with diabetes, CHF, and COPD.